Here are drawings I made of a hammer, some nails, and a stack of lumber.
I want you to use them to build a house for me. Absurd? Of course.
Here are some pieces of paper with fancy scrollwork and pictures of dead men on them. I printed them in my garage over the weekend. I will give you these pieces of paper in exchange for real hammers, nails, and lumber so that I can build myself a house. Absurd? Of course.
Here is the banking system. The government has given those in charge of the system the privilege of creating credit (i.e., fiat money). The credit can be used to purchase bonds (debt) authorized by the government. The government uses the money it receives from selling bonds to finance anything it wants or to reward anyone it chooses. Bank credit is just clever accounting, and is no more real than my drawings or my printed pieces of paper. Absurd? You tell me.
What are the hallmarks of such a system? How would your behavior change if you had access to this effort free source of money? Why would you say no to any idea that you believe will help you maintain your power? What sort of relationship will develop between those in charge of the banking system and those in charge of the government that bestows the privilege? Can anyone resist the temptations inherent in a system that can provide unlimited financing? What happens when enough people apprehend this fraud? What will happen to the value of the outstanding bonds when there are no longer enough people still working to pay the interest on the government’s bonds? How long can such a system last?